Tinubu directs CBN to halt the implementation of the cybersecurity levy.

President Bola Tinubu has ordered a review and requested that the controversial cybersecurity levy policy be put on hold by the Central Bank of Nigeria.

This came about as a result of the House of Representatives’ resolution to request last Thursday that the CBN rescind the circular ordering all banks to start imposing a 0.5% cybersecurity tax on all electronic transactions made in the nation.

Following the guidelines outlined in the Cybercrime (Prohibition, Prevention, etc.) (Amendment) Act 2024, the CBN issued a circular on May 6, 2024, requiring all banks, mobile money providers, and payment service providers to impose a new cybersecurity charge.

The National Cybersecurity Fund, which is supervised by the Office of the National Security Adviser, will receive a levy equal to 0.5 percent of the total value of all electronic transactions, as per the Act.

The fee must be applied by financial institutions at the origination point of electronic transfers.

The sum that has been withheld must be clearly indicated in client accounts with the label “Cybersecurity Levy” and sent by the financial institution. The fee must be implemented by all financial institutions within two weeks of the circular’s release.

It follows that financial institutions should start deducting the fee on May 20, 2024.

Remittances from financial institutions, however, must be made in bulk to the NCF account held at the CBN by the fifth business day of the following month.

The circular also provides financial institutions with a timeline for system reconfiguration in order to guarantee the timely and accurate submission of remittance files to the Nigeria Interbank Settlement Systems Plc. The timeline is as follows: “Banks providing payment services, merchant accounts, non-interest banks, and commercial accounts—within four weeks of the circular’s release.

The circular said that “all other financial institutions (development financial institutions, primary mortgage banks, and microfinance banks) – within eight weeks of the issuance of the Circular.”

The CBN has stressed the need for rigorous adherence to this requirement and has threatened to impose harsh penalties on any financial institution that disobeys the rules. According to the Act, upon conviction, non-compliant entities face a minimum penalties equal to two percent of their yearly sales.

To prevent the charge from being applied more than once, the circular offers a list of transactions that are currently considered eligible for exemption.

These include salary payments, loan disbursements and repayments, intra-account transfers for the same client within the same bank or between banks, and intra-bank transfers between the same bank’s customers.

Transfers by other financial institutions to their correspondent banks, placements between banks, transfers by banks to the CBN and vice versa, transfers between branches within a bank, clearing and settling checks, letters of credit, and funding for banks’ recapitalization are among the exclusions.

The transfer of large amounts of money from savings, deposits, and collection accounts, as well as transactions involving long-term assets like bonds, treasury bills, and commercial papers, as well as transactions related to government social assistance programmes, are among the others.

These could include pension payments, charitable and non-profit transactions, such as donations to officially recognised charities or non-profit organisations, and transactions involving schools, universities, and other educational institutions. They could also include transactions involving the bank’s internal accounts, reserve accounts, nostro and vostro accounts, and escrow accounts.

Stakeholders’ reactions to the proposed fee were mixed because it is anticipated to increase the cost of doing business in Nigeria and would impede the spread of digital transaction usage.

“Cease levy immediately.”

The circular instructing financial institutions to start implementing the 0.5% cybersecurity charge was withdrawn by members of the House of Representatives on Thursday after it was deemed to be “ambiguous.”

The action came in response to a motion made by Kingsley Chinda outlining the urgent necessity to stop and alter the cybersecurity levy’s implementation.

The House states that the CBN must “issue a more understandable one” and remove the original circular.

Chinda had brought to the House’s attention several readings of the CBN instruction that did not align with the Cybersecurity Act’s requirements.

The House then voiced concern that if quick action was not taken to address the issues with the interpretation of the Cybersecurity Act and the CBN instruction, the Act will be implemented incorrectly.

Sunday PUNCH was informed by individuals who are aware of Tinubu’s stance on the matter that the President was aware of the financial strain that Nigerians were under since his strict economic reforms went into effect in May of last year and that he did not want to take the chance of making matters worse by imposing additional taxes.

Our correspondent was informed by a senior presidential official, who wished to remain anonymous, that the president is cognizant of the feelings of Nigerians. Furthermore, he won’t want to carry out the implementation of a policy that increases the workload for the populace.

Thus, he has mandated a study and urged the CBN to postpone implementing that policy. I would have stated that the CBN was directed by him, but since the CBN is independent, it is inappropriate. However, he has requested that the CBN postpone and reevaluate the situation.

These differences led the President to order a review, according to a second administration official who wished to stay anonymous because he was not permitted to comment on the matter.

The statute is older than the Tinubu administration, if you look at it. It was signed by Goodluck Jonathan and put into effect in 2015. It’s just now being put into practice.

“You are aware that while that directive was being distributed, Tinubu was not present. Furthermore, he wants to avoid giving the impression that his government is callous. As of as now, the CBN has delayed telling banks to begin charging customers. The President is therefore sensitive. He doesn’t only want to tax Nigerians in this way. He doesn’t mean to do that. Thus, he has mandated that law be reviewed.

Tax changes won’t irritate Nigerians, says Shettima

On Saturday, Vice President Kashim Shettima stated that the goal of the tax reforms implemented by the Bola Tinubu administration was to maintain Nigeria’s investment-friendly environment rather than to irritate its citizens.

Speaking at the Presidential Fiscal Policy and Tax Reforms Committee’s close-out retreat at the Transcorp Hilton in Abuja, the vice president was accompanied by his special adviser on general duties, Dr. Aliyu Umar. According to a statement released by Shettima’s spokesperson, Mr. Stanley Nkwocha, “Our tax reforms initiated for overall benefits of Nigerians”

As he put it, “we are not here to frustrate any sector of our economy but to create an administrative system that ensures the benefits of a thriving tax system for all our citizens,” in contrast to certain people’s rumours.

PDP: Levy suspension is a positive thing.

The national publicity secretary for the Peoples Democratic Party, Debo Ologunagba, responded to the president’s decision by applauding the suspension of the cybersecurity levy policy’s execution and pointing out that the policy should never have been adopted in the first place.

“It was an anti-people decision from the start,” he declared. From the start, the decision was inconsiderate. It was a surprise attack on those who were already irritated by the various tax slabs from the start. Therefore, it was a rather harsh beginning, as having cybersecurity does not require taxing us.

“Taxing villagers or those living in rural areas is not necessary to fund cybersecurity. others without even access to light. They don’t even have internet access available to them. That’s good, then, if the president is paying attention to that show. Subsequently, he needs to keep listening and start investigating the root of the issue, which is the elimination of subsidies without providing any buffering. The president should take further action to ensure that a policy is in place to lessen the hardship caused by the abrupt elimination of the subsidy, allowing Nigerians to breathe easier.

In response to the event, Dr Muda Yusuf, the CEO of the Centre for Promotion of Private Enterprises, stated that the President’s choice demonstrates his democratic affiliation. She also mentioned that the CBN ought to guarantee that the policy review process is highly inclusive.

“The President’s choice is in keeping with the public’s outcry. There was a great deal of outrage over it, and the president’s response demonstrates his democratic affiliation. He is evidently a listening leader. Therefore, we have to give him credit for hearing what the people have to say. This is a positive step forward.

“The policy should now be examined by the government. I have no doubt that it won’t be limited to the CBN. Since they enacted the legislation, even the lawmakers ought to have a look at it. The necessity of reviewing the policy is crucial, nevertheless. Furthermore, the evaluation should be conducted by the top bank outside of the government. Stakeholders and organised private sectors must be consulted. Because of this, the evaluation will be extremely inclusive.

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Debo Adeniran, the director of the Centre for Anti-Corruption and Open Leadership, also spoke to Sunday PUNCH and stated that although President Tinubu should be praised for his decision, the Federal Government ought to think about completely scrapping the policy rather than just temporarily suspending it.

“This is the right step in the right direction,” he remarked. It highlights even further how President Tinubu pays attention to what the people have to say. Perhaps it’s because he was an activist in the past. He is aware that the voices of the people represent God.

However, the policy’s suspension is insufficient. The policy ought to be completely cancelled as a result. All of the levies, rates, and taxes that are imposed on the public should be simplified so that we are aware of what we are paying for personal income taxes if we choose to do so. It is not that we should suddenly pay for every service we should receive from the government since the government will no longer remove personal income taxes. Additionally, all Nigerians should be able to afford the rising cost of microeconomic goods like petroleum and others, he said.

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Sheriffdeen Tella, an economics lecturer at Olabisi Onabanjo University, also advised the federal government not to put Nigerians through any more suffering. Although the policy was a good idea, he argued the time was off.

“The levy was appropriate at the time, but there’s nothing wrong with it,” he stated. It is time for the government to quit putting itself in trouble. You are taxing people when they are struggling with inflation and many forms of inefficiencies. The president’s decision to reverse it was a wise one. The time is not right to put Nigerians under more stress. I applaud the President for having the guts to act morally.

SERAP makes legal threats

In the meantime, the Federal Government was threatened with legal action by the Socio-Economic Rights and Accountability Project if the levy was not removed within 48 hours. The fee “patently violates the provisions of the Nigerian constitution 1999 (as amended) and the country’s international human rights obligations and commitments,” the group said.

Labour refuses to levy

The Nigeria Labour Congress, however, claimed that the cybersecurity fee, along with a number of other taxes and levies previously placed on the people, had increased the financial burden already placed on the people, who are already facing difficult economic times.

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In a statement, NLC President Joe Ajaero called for the CBN to reverse the directive and stated that the Federal Government need to give priority to measures that lessen Nigerians’ financial difficulties. NLC stated that the seemingly intended action to strengthen cybersecurity defences would worsen the financial burden currently experienced by the public.